A Short Introduction about the Blockchain

For ordinary people, you would be forgiven for horror the sheer complexity of technical jargon that is often employed for describing this mysterious thing called blockchain if you tried to plunge into it. So let’s think about what a cryptocurrency is and how blockchain technology can make the world different.

A blockchain is, in the simplest sense, a digital registry of transactions, not unlike the booklets we use for centuries to record sales and purchases. This digital leaflet is actually somewhat similar to a traditional leaflet because it records debits and credits between people. This is the core concept behind blockchain; the difference is who controls and reviews transactions. See https://forza-trading.com/trading-automatico/bitcoin-profit/ know about bitcoin trading.

For conventional transactions, some kind of mediator is involved in a transfer from person to person to facilitate the transaction. Let’s presume that Rob wants Melanie to pass £ 20. He can either send her cash in the form of a £ 20 bill, or he can transfer the money to his bank’s account with a kind of banking app. A bank is an agent in each case for the transaction: Rob’s funds are checked when he takes the money out of a cash machine, or when he makes a digital transfer, they are confirmed by the app. The bank determines whether the transaction will continue. The bank keeps records of all Rob transactions and is solely responsible for updating them anytime Rob pays someone to his account or receives money. It ensures that the bank holds and regulates the booklet and everything flows through the bank.

This is a lot of responsibility, so it’s important Rob feels he can trust his bank if he doesn’t risk his money. He must be assured that the bank won’t defraud him, that he won’t lose his money, be stolen and don’t vanish overnight. The need for confidence has enabled almost every big action and feature of monolithic financial industry, in so far as the government (another intermediary) preferred to save the banks rather than risking to break ultimate fragments of trust by allowing them to fail, even if it found that banks were careless with our money during the 2008 financial crisis.

In one main aspect, Blockchains operate differently: they are totally decentralized. There is no single clearinghouse such as a bank and no central directory owned by an individual. The directory is instead spread over a large network of computers called nodes, each having a copy of the whole directory on its respective hard drives.

When a new transaction is made, it is first encrypted using state-of-the-art encryption technology. When authenticated, the transaction is converted to a block, the term for an encrypted group of new transactions. The block is then sent (or transmitted) to the computer node network where the nodes are checked and then transferred through the network, once confirmed, so that the block is added to the end of the ledger on every computer under a list of all previous blocks. This is called the chain, so the code is called a blockchain.

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